August data from CREA shows the five-month rebound has stalled, but RBC Economics says the underlying market is solid
Canada's housing market hit a soft patch in August 2026, with national home resales edging down for the first time since spring. But RBC Economics remains confident in the overall market.
According to figures released this week by the Canadian Real Estate Association (CREA), national MLS home sales fell 0.7 per cent on a month-over-month seasonally adjusted basis in August, pulling activity back to levels last seen in May.
The retreat ended five consecutive months of incremental gains and coincided with a fresh escalation in Canada-U.S. trade tensions that rattled buyer confidence and nudged more sellers to list.
But Rachel Battaglia, an economist at RBC in Toronto who covers the Canadian provincial economies and housing trends, characterised the August numbers as a detour rather than a derailment.
In RBC's September monthly housing market update, Battaglia wrote that the bank reads the slowdown as "more of a pause than inflection point," pointing to trade uncertainty as a temporary drag on sentiment rather than a structural shift in market direction.
For financial advisors assessing residential real estate's role in client portfolios and broader economic outlooks, the nuance matters. RBC's view is that the market's recovery mechanics remain in place - even if they have temporarily stalled. Advisors tracking housing's impact on Canadian household wealth will note that the RBC analysis does not signal a reversal of the broader stabilisation trend that has been building since January 2026.
What the August numbers show
New listings rebounded 3.3 per cent month-over-month in August 2026, reversing three straight months of declines.
CREA Chair Garry Bhaura attributed the surge to sellers looking to get an early start to the fall market, particularly given how late the Labour Day holiday fell this year. That supply increase, combined with the small pullback in sales, pushed the national sales-to-new-listings ratio down to 49.1 per cent from 51.1 per cent in July — still within CREA's definition of balanced market territory, which runs between approximately 45 and 65 per cent.
Inventory held at just under 200,000 properties nationally, in line with the historical average for August and up only 1.4 per cent year-over-year, per CREA's September 15, 2026 release. Months of inventory remained at 4.8 - unchanged for a fourth consecutive month and slightly below the long-term average of five months.
The National Composite MLS Home Price Index (HPI) was flat month-over-month, with the non-seasonally adjusted reading sitting 3 per cent below August 2025. That year-over-year gap, however, represents the smallest annual decline recorded since October 2025, according to CREA, a signal Battaglia flagged as evidence of continued deceleration in price weakness. The non-seasonally adjusted national average sale price came in at $668,219 in August 2026, up 0.6 per cent from a year earlier.
RBC's regional read
RBC's analysis highlights a market that is becoming increasingly fragmented at the regional level - a factor with direct implications for advisors working with clients who hold real estate assets across different provinces.
Vancouver, which RBC identifies as one of the nation's softest markets, saw resales edge up in August and cross the 2,000-unit threshold for the first time in nine months, even as prices continued their gradual downward drift.
Toronto saw a similar dynamic, with home prices edging marginally lower in August following small gains in June and July. Ottawa offered a more positive data point: annual growth in the MLS HPI crossed into positive territory for the first time in 2026, which RBC described as an important milestone, albeit one that could see further volatility before annual price gains are firmly established.
The contrast with other regions remains stark. Atlantic Canada, Quebec, and parts of the Prairies continued to record year-over-year price gains, though appreciation has been decelerating. Pockets of seller-market conditions persist in cities including Saskatoon, Regina, Winnipeg, Sherbrooke, Saint John, and Halifax, according to RBC , albeit with weakening intensity.
Advisors working with clients in Ontario and British Columbia who are weighing real estate exposure should note that prices in most of those two provinces remain below year-ago levels, even as the pace of declines continues to slow.
What comes next
RBC's baseline is for gradual stabilisation through the second half of 2026 and into 2027, with the caveat that any recovery will be regional and incremental rather than broad-based.
The bank's view is that the market's modest tightening earlier in the summer remains structurally supported with new listings still running below year-ago levels on an annual basis, which has helped contain inventory and prevent a sharper price correction.
The wild card is the rate environment. CREA's Senior Economist Shaun Cathcart noted that the Bank of Canada has recently flagged rising inflation risks, and that fixed mortgage rates have already climbed on higher bond yields. Markets have begun pricing in the possibility of a rate hike before year-end - a scenario that Cathcart said would further dampen the prospects for housing market momentum heading into 2027.
The Bank of Canada held its overnight rate at 2.25 per cent at its September 2026 decision, maintaining a hold for the sixth consecutive meeting, but flagged stronger upside inflation risks tied to energy prices and the reintroduction of aggressive U.S. tariffs on Canadian exports, according to a September 2, 2026 report from Trading Economics.
With rate certainty in short supply, RBC's Battaglia concluded that any housing pickup will be measured and that the August softness, while unwelcome, does not change the broader trajectory that advisors should be communicating to clients with residential real estate exposure.
For advisors monitoring how monetary policy uncertainty is shaping Canadian investment decisions, the housing data adds another layer of complexity to an already uncertain second half of the year.
